Why are food prices still so high?
Updated on 17 February 2009
A key measure of inflation hits its lowest level for nearly half a century. So why is the weekly shopping so expensive?
Economists had predicted a sharp drop in inflation, but the official figures revealed a surprisingly small fall.
On the government's preferred measure of inflation, the consumer price index, prices rose 3 per cent in January - that was just a small drop from December's rise of 3.1 per cent.
And the retail prices index, which includes housing costs, fell from 0.9 per cent to 0.1 per cent, taking Britain to the brink of deflation.
March 1960 was the last time the headline rate of the retail prices index dropped so low. That inflation measure includes mortgages and is expected to slip into negative territory in the coming months.
But overall inflation didn't fall by as much as expected, partly because retailers held their best sales before Christmas, partly because the price of groceries is holding up.
Interview: Andrew Opie
Carl Dinnen interviews Andrew Opie from the British Retail Consortium.
Are people saving less?
Inflation may have fallen, but new research suggests that people are still worried about rises in the cost of living and a fall in pay.
A survey by Virgin Money shows that almost one in three people expect a drop in their income this year.
Of those surveyed 42 per cent will spend less on luxury goods, and 20 per cent are worried about affording new clothes.
Carl Dinnen interviews Rob Clifford, managing director of Virgin Money.
